Incoming Trump administration Treasury Secretary nominee Steven Mnuchin departs after working a simulated crisis scenario during transition meetings at the Eisenhower Executive Office Building at the White House in Washington, U.S. January 13, 2017.JONATHAN ERNST/Reuters
Steven Mnuchin, the U.S. Treasury Secretary contender, is expected to face tough questions over the role his bank played in foreclosing on Americans' homes when a congressional panel vets him for the top country's top economic job on Thursday.
The Senate Finance Committee vetting will help shed light on the former hedge fund manager's plans to steer the U.S. economy, deregulate Wall Street, revamp the U.S. tax code and oversee the financial system.
But with many Americans still trying to recover from the U.S. housing collapse, the public hearing will present Democrats with an opportunity to skewer one of Republican president-elect Donald Trump's cabinet nominees as someone who profited from struggling homeowners.
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"Given Mr. Mnuchin's history of profiting off the victims of predatory lending, I look forward to asking him how his Treasury department would work for Americans who are still waiting for the economic recovery to show up in their communities," Ron Wyden, the top Democrat on the Senate panel said in a statement.
Democrats, who lost the presidential election in part because of Mr. Trump's populist appeal, plan to focus on Mr. Mnuchin's tenure at OneWest Bank, a mortgage lender Mr. Mnuchin and his investment partners acquired from regulators after the bank cratered during the 2007-09 financial crisis.
Dubbed the "foreclosure machine" by progressive groups, OneWest foreclosed on thousands of homes and is being probed for its predatory practices. Mr. Mnuchin acquired the bank, then named IndyMac, for $1.5-billion (U.S.) in 2009 and sold it for $3.4-billion in 2015.
"The images of boarded-up homes and families being kicked out of their neighbourhood is in so many people's minds. There are certainly real questions about what his role was in many of those foreclosures," said Rohit Chopra, former assistant director with the Consumer Financial Protection Bureau and now a fellow at the country's largest consumer advocacy group.
There are also questions about Mr. Mnuchin's potential conflicts of interests with his business ties and investments. Before he bought and ran OneWest, the Treasury Secretary nominee spent nearly two decades at Goldman Sachs Group Inc. He also ran hedge fund Dune Capital Management and had a successful stint as a Hollywood film financier, producing films such as Suicide Squad.
Mr. Mnuchin has agreed to divest his stakes in 43 entities such as Goldman Sachs, Blackstone Group LLP and Microsoft Corp.
But Democrats are particularly interested in his investment ties to government-controlled mortgage financiers Fannie Mae and Freddie Mac.
"How will your past business – and presumably social – connections to hedge fund partners who invested in … Fannie Mae and Freddie Mac inform your views on efforts to reform those enterprises," Democratic Senator Sherrod Brown asked in a letter to Mr. Mnuchin.
After Mr. Mnuchin was nominated, he said the government should privatize Fannie and Freddie, which triggered their shares to soar and raised questions over whether he profited from their gains.
The Treasury Secretary nominee will also be questioned on his views on overseeing banks and fair lending laws.
Mr. Trump has vowed to slash taxes and dismantle the Dodd-Frank regulation law, which bolstered Wall Street oversight after the global financial crisis.
That law also entrusted the Treasury Department with the top role in monitoring risks to the financial system. It is unknown whether this will be killed in the Trump administration's quest to deregulate.
Aside from the lack of government experience, the 54-year old Mr. Mnuchin has no relations with federal lawmakers, whom he will need to pass legislation.
Nevertheless, Mr. Mnuchin has a good chance of winning congressional approval.
The Senate Finance Committee is controlled by Republicans and the panel's chairman has said his party is supportive of Mr. Mnuchin.
If confirmed, Mr. Mnuchin will face his first obstacle in March, when the Trump administration will have to convince Congress to raise the debt ceiling – the limit on how much the U.S. government can borrow.
Rachelle Younglai